Although return on investment (ROI) is frequently quoted and even the deciding factor in some issues, ROI is poorly understood and often misused. Most ROI calculations ignore the difference between hard and soft dollars and almost none provide a Net Present Value (NPV) calculation. Finally, ROI dollars are often left on the table and not taken advantage of when discussing payback of investments dollars.
One of the biggest pet peeves of time and attendance ROI is treating soft dollars the same as hard savings. What’s the difference you ask?
A product, process, or operation that results in the company or an employee spending less time is likely soft savings. Examples:
- Supervisors spend less time on time cards and can focus on their real jobs
- Automatic accruals and improved record keeping ensure employee receives only PTO days they have earned
A product, process, or operation that results in the company spending less money can be categorized as generating savings – saving real hard cash. Examples:
- Better employee scheduling reduces overtime
- More consistent enforcement of pay policies results in fewer grievances
The most frequently quotes statistic in time and attendance ROI calculations is the error rate when manually preparing time cards. The American Payroll Association (APA) and other studies estimate the error rate averages .5% to 2.0%. Even a small company can have an annual payroll of $5 million. Reducing the error by 0.5% can save a company $50,000 in hard dollars!
A powerful scheduling & Attendance Module, now available for bigfishpayroll.com/bigfishcore/">www.bigfishpayroll.com/bigfishcore/payroll-services/isolved/">isolved Time. iSolved Time is now available to help reduce the time spent on employee scheduling and tracking attendance. This new module allows you to easily build employee schedules, monitor attendance, and compare schedules, vs. time worked. Because it is native to iSolved, all data is immediately accessible for accurate payroll processing.